Lawmakers move to fix a gaping hole in class action lawsuit awards.

A Multnomah County
circuit jury found customers of BP-franchised service stations are owed
as much as $580 million in a class action verdict for being charged a
hidden fee on debit-card gasoline purchases.

The only problem for consumers: Under current Oregon law, BP will probably never pay most of that money.

“That’s unfair,” says
state Rep. Tobias Read (D-Beaverton). “If a defendant is judged to owe
money, they should have to pay. Otherwise, there’s a real incentive to
do something wrong.”

Although February
legislative sessions were designed to consider budget tweaks and
low-stress legislation, Read and Rep. Jennifer Williamson (D-Portland),
are pushing a contentious bill to tackle the long-standing issue.

Currently, if a court
finds that a class of people has been wronged and awards them financial
damages, those people typically need to fill out forms to claim their
money. For a variety of reasons, however, many do not. As a result, they
don’t get their money, and under Oregon law, the funds remain with the
defendant.

In the BP case, for
instance, the plaintiffs’ lawyer, Portlander David Sugerman, showed that
records that would have allowed identification of most of the 2.9
million customers affected were destroyed. That means many may never
claim the $200 they each have coming. (That figure is prescribed by law
for reckless violations of the Oregon Unlawful Trade Practices Act.)

In 48 states, BP
would have had to pay anyway, but just two states—New Hampshire and
Oregon—allow the unclaimed money to revert to the wrongdoer.

Read and Williamson
have sponsored legislation—House Bill 4143—that would allocate unclaimed
damages in class action suits to Legal Aid of Oregon. Initially, Read
and Williamson proposed sending the unclaimed funds to Oregon’s
rainy-day fund. After the bill’s first hearing, they amended the
beneficiary to Legal Aid, which provides free legal assistance to
low-income Oregonians.

“We just felt there was more of a nexus between a judgment and the provision of legal services,” Williamson says.

The legislation is not new—Oregon lawmakers have introduced similar legislation three times since 2005.

The legislators’
solution displeases many business interests, but none more influential
than Dave Frohnmayer and Bill Gary—two lawyers for the Harrang Long firm
who circulated a floor letter opposing the changes.

“The bill authorizes
unconstitutional procedures, is unfair to class members and to
defendants, and is fundamentally unworkable,” Frohnmayer and Gary wrote
in the Feb. 14 letter. “It will have undesirable and unworkable
consequences.”

Those words carry a
lot of weight. Frohnmayer was Oregon’s attorney general from 1980 to
1990 and president of the University of Oregon from 1994 to 2009. He
still teaches law at UO. Gary, who served as Frohnmayer’s deputy at the
Oregon Department of Justice, is one of the state’s top lawyers,
representing Nike, for instance, in the 2013 special legislative session
that gave the sporting-goods giant special tax treatment.

She and Read take
specific exception to Frohnmayer and Gary’s letter because it makes no
mention of the fact that their firm represents cigarette manufacturer
Philip Morris in a current case before the Oregon Supreme Court, as well
as BP in the oil company’s appeal of the $580 million Oregon verdict.

“I believe that should have been disclosed,” Williamson says. “They are interested parties in the outcome of any vote.”

“House rules require
legislators to disclose potential conflicts of interest,” Read adds. “If
they were held to that standard, they’d have to disclose those client
relationships.”

Gary says proponents of the bill are erring in trying to address a complex legal matter in a brief session.

He says as currently
written, the bill does more than just distribute unclaimed funds to
Legal Aid, and could change the amount owed.

As for the floor
letter, which was distributed to all House members, Gary says it should
have included a disclosure that his law firm represents clients who have
a financial stake in proposed legislation.

“If that wasn’t made
clear in the floor letter, it was because things were moving quickly on
Friday when it went out,” Gary says. “We represent multiple clients who
have an interest in the bill.”

HB 4143 passed the House on Feb. 17 by a 36-21 vote and is now in the Senate.

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